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4 June 2010

Cover Versions and the Proposed Amendments to Copyright Law

The use of an underlying work in a film other than in conjunction with the film would involve the exploitation of the underlying work through such media as video clips, wall papers and ring tones. One of the media which could potentially come into play is the exploitation of the work through a cover version.
It has been proposed to introduce into the Copyright Act, 1957, a statutory licence for cover versions vide Section 31C. The statutory license for cover versions proposed to be provided for in Section 31C is very similar to the “license” provided for in Section 52(1)(j) of the current Copyright Act, 1957 [which latter Section the Amendment Bill proposes to delete]. According to the Notes on Clauses, the proposed provision ‘seeks to provide statutory licence to any person desiring to make a cover version of a sound recording in respect of any literary, dramatic or musical work, where sound recordings of that work have been made by or with the consent of the owner of the right in the work in the same medium as the last recording, unless the medium of the last recording is no longer in current commercial use’.

Although a bare reading of the existing Section 52(1)(j) of the current Copyright Act would seem to make it clear that the consent of the owner of the copyright in the concerned work is not required for a cover version of the work to be made, in practice, there has been a significant amount of controversy on this subject.

It is pertinent to note that when the Copyright Act was first passed, the corresponding Section stated:

(j) the making of records in respect of any literary, dramatic or musical work, if –
(i) records recording that work have previously been made by, or with the license or consent of, the owner of the copyright in the work; and
(ii) the person making the records has given the prescribed notice of his intention to make the records, and has paid in the prescribed manner to the owner of the copyright in the work royalties in respect of all such records to be made by him, at the rate fixed by the Copyright Board in this behalf:
Provided that in making the records such person shall not make any alterations in, or omissions from, the work, unless records recording the work subject to similar alterations and omissions have been previously made by, or with the licence or consent of, the owner of the copyright or unless such alterations and omissions are reasonably necessary for the adaptation of the work to the records in question;

As can be seen from the extract above, in its initial version, Section 52(1)(j)(i) clearly stated that it was only the initial recording which required the consent of the copyright owner, and not the subsequent recording i.e. the cover version. This Section was, however, amended (by substitution) in 1994. The word “previously” did not find mention in the new Section 52(1)(j)(i), possibly because it should have been obvious that the consent of the copyright owner would be required only for the initial recording – requiring its consent for the cover recording would effectively defeat the very foundation of the provision : What would the point of a Non-Voluntary licence be is the rights owner could Voluntarily decide whether or not it was to be granted.

However, despite the deluge of litigation (referred to earlier) on the subject of whether or not the consent of the copyright owner is required to make a cover version, the Amendment Bill unfortunately does nothing to clarify the issue. Apart from this, the most significant difference between the proposed Section 31C and the existing Section 52(1)(j) is that the proposed provision would be in the form of a statutory licence while the existing provision is an exception to copyright. In other words, it would be a defence in cases where copyright had been alleged to have been infringed but the alleged infringement fell within the scope of the existing Section 52(1)(j).

Under the provisions of the proposed amendment, the person making a cover version of the sound recording must give prior notice of his intention to the owner of the copyright in the recording and provide to the owner, in advance, copies of all covers or labels with which the sound recordings are to be sold. Cover versions made under this provision cannot be sold or issued in any form of packaging which could mislead or confuse the public with regard to their identity. In particular, they must not contain the name or depict any form of an earlier sound recording of the same work or any cinematograph film in which the sound recording was incorporated. In addition to this, cover versions made under Section 31C must necessarily state on their cover that they are cover versions made under this proposed section of the Copyright Act.

The person making a cover version would not be permitted to alter the literary or musical work in the way in which it has not been altered previously either by or with the consent of the copyright owner unless the alteration is technically necessary for the purpose of making the sound recording and a cover version may not be made under the provisions of this Section until five years have expired from the end of the year in which the first sound recording of the work was made. This is another provision of the proposed amendment which is at variance with the existing law: under Section 52(1)(j), a version recording may be made two calendar years after the end of the year in which the first sound recording of the work was made. This extension of the time period may be of concern to those wanting to make cover versions since the period during which most works are “commercially exploitable” is narrow.

Under the proposed statutory licence, the person making the recording must also pay royalties in respect of all the copies to be made by him to the copyright owner in advance. The rate at which royalties must be paid is the rate fixed by the Copyright Board in this behalf, and the person making the cover version must pay royalty for a minimum of 50,000 copies of each work during each calendar year in which copies of it are made. This would negate, or, at least, dilute, the adverse effects for copyright owners in cases where accounts are falsified by those who are granted licences. The Copyright Board has also been granted the discretion to fix a lower minimum number by general order in respect of works in a particular language or dialect in consideration of their potential circulation. Thus, the powers granted to the Copyright Board under the proposed provision are extremely broad.

The proposed section also mandates that the person making cover versions maintain registers and books of account in respect of the cover versions which include full details of the existing stock. He must also allow the owner of rights or his duly authorized agent/representative to inspect all such records and the books of account. A complaint may be brought before the Copyright Board that the person making cover versions has not paid, in full, the amount contemplated by this proposed provision. If the Copyright Board is prima facie satisfied that the complaint is genuine, it may pass an ex parte order directing the person making cover versions to cease from doing so and, after making an inquiry as it considers necessary, the Copyright Board may ask for the orders which include an order for the payment of royalty.

1. Disputes Regarding the Issue of Consent:
In the 1998 case of Gramophone Company of India Limited v. Super Cassettes Industries Limited, 1999 PTC 252 (Del.), the High Court of Delhi granted an injunction which restrained the sale of the version recordings in circumstances where the copyright owner had expressly refused permission for the making of a version recording to the party proposing to do so. The High Court of Karnataka did not agree with this interpretation of Section 51(1)(j) in the 1999 case of the Gramophone Company of India Limited v. Mars Recording Pvt. Ltd. [2000 PTC 117 (Kar.)]. An appeal was preferred to the Supreme Court in 2001 [vide Special Leave Petition (Civil) 2120 of 2000] against the decision of the High Court of Karnataka although the Supreme Court did not decide the issue. Instead, it merely remanded the case back to the trial court.; Also see: Music India Ltd v. M/S Super Cassettes Industrial Pvt. Ltd & Ors. [1987 PTC (Bom.) 83]; Sulamangalam R. Jayalakshmi & Other v. Meta Musicals, Chennai & Ors. [2000 PTC (Mad.) 681]; Super Cassette Indusries Ltd. v. Bathia Cassette Industries Pvt. Ltd. [2003 (27) PTC 280 (Del.)].

2. The Text of the Proposed Section 31C.

31C. Statutory Licence for Cover Versions
(1) Any person desirous of making a cover version, being a sound recording in respect of any literary, dramatic or musical work, where sound recordings of that work have been made by or with the licence or consent of the owner of the right in the work, may do so subject to the provisions of this section: Provided that such sound recordings shall be in the same medium as the last recording, unless the medium of the last recording is no longer in current commercial use.
(2) The person making the sound recordings shall give prior notice of his intention to make the sound recordings in the manner as may be prescribed, and provide in advance copies of all covers or labels with which the sound recordings are to be sold, and pay in advance, to the owner of rights in each work royalties in respect of all copies to be made by him, at the rate fixed by the Copyright Board in this behalf:
Provided that such sound recordings shall not be sold or issued in any form of packaging or with any cover or label which is likely to mislead or confuse the public as to their identity, and in particular shall not contain the name or depict in any way any performer of an earlier sound recording of the same work or any cinematograph film in which such sound recording was incorporated and, further, shall state on the cover that it is a cover version made under this section.
(3) The person making such sound recordings shall not make any alteration in the literary or musical work which has not been made previously by or with the consent of the owner of rights, or which is not technically necessary for the purpose of making the sound recordings:
Provided that such sound recordings shall not be made until the expiration of five calendar years after the end of the year in which the first sound recordings of the work was made.
(4) One royalty in respect of such sound recordings shall be paid for a minimum of fifty thousand copies of each work during each calendar year in which copies of it are made: Provided that the Copyright Board may, by general order, fix a lower minimum in respect of works in a particular language or dialect having regard to the potential circulation of such works.
(5) The person making such sound recordings shall maintain such registers and books of account in respect thereof, including full details of existing stock as may be prescribed and shall allow the owner of rights or his duly authorised agent or representative to inspect all records and books of account relating to such sound recording:
Provided that if on a complaint brought before the Copyright Board to the effect that the owner of rights has not been paid in full for any sound recordings purporting to be made in pursuance of this section, the Copyright Board is, prima facie, satisfied that the complaint is genuine, it may pass an order ex parte directing the person making the sound recording to cease from making further copies and, after holding such inquiry as it considers necessary, make such further order as it may deem fit, including an order for payment of royalty. Explanation.—For the purposes of this section ―cover version‖ means a sound recording made in accordance with this section.

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